Sensex and Nifty 50 Surge to Record Highs Amid Optimism; Experts Advise Caution Despite Potential Risks
On August 30, the Indian stock market’s benchmark indices, Sensex and Nifty 50, soared to unprecedented levels. Sensex touched 82,637, and Nifty 50 reached 25,258.80, setting new records. This rally was supported by the BSE Midcap and Smallcap indices, each gaining nearly a percent, while the total market capitalization of BSE-listed companies neared ₹465 lakh crore.
Despite concerns over high valuations, the market remains buoyant, driven by expectations of rate cuts, strong economic growth, and robust retail investor participation. Foreign institutional investors (FIIs) have also returned to buying Indian stocks, anticipating the beginning of a rate-cut cycle.
However, experts warn that several factors could influence the market’s direction, including geopolitical tensions, high valuations, and the results of the US Presidential Election. While the market could face corrections, these are expected to be shallow and may provide buying opportunities.
Nifty 50 Strategy:
- Manish Chowdhury, Head of Research, StoxBox: With Nifty 50 holding above 25,000, the index could potentially reach 26,000 in the near term, supported by resilient large-cap stocks, easing tensions in the Middle East, and favorable monsoon conditions.
- Hardik Matalia, Derivative Analyst, Choice Broking: The Nifty 50’s consistent performance above 25,000 suggests continued bullish momentum. A “buy on dips” strategy is recommended, with targets at 25,350 and 25,500.
- Shrey Jain, Founder & CEO, SAS Online: Nifty 50 has strong support at 25,000, with potential targets at 25,300 and 25,500. Avoid aggressive shorting and adopt a disciplined approach to buying on dips.
Midcap and Smallcap Strategy:
- Ajit Mishra, SVP- Research, Religare Broking: The broader indices’ rally, driven by selective stock performance, is likely to continue. However, gains may be gradual. A selective approach focusing on themes with strong valuations is advised.
- Kunal Mehta, Associate Director at Equirus: Caution is essential when investing in mid and small-caps. A relative valuation strategy within the same sector can provide a margin of safety.
- Mythili Balakrishnan, Co-fund Manager, Alchemy Capital Management: The rally in small and mid-cap stocks is supported by robust earnings growth. Investors should align their strategies with long-term goals and avoid being swayed by short-term market movements. Reasonable return expectations are advised for the future.
